Oil and gas is most likely to be affected due to the fact that they operate in parts of the world where they are exposed to extra risks and therefore more liable to corruption.

Ernst & Young have formulated a list of the top 10 sectors most likely to be at risk of investigation under the new Bribery Act. Life sciences and consumer products come second and third, followed by technology, real estate, automotive, telecommunications, asset management, banking and capital markets, and government and mining and metals. This information is based on the analysis of bribery convictions under the US’s similar Foreign Corrupt Practices Act.

The Bribery Act will be put into effect in July, having suffered long delays due to complaints that the guidelines were unclear, particularly on corporate hospitality and entertaining. The guidelines have now been clarified but there is still anxiety among companies about how it will be carried out.

The SFO has indicated that it will take a “wide view” of its powers to prosecute companies. With little information about the SFO’s enforcement strategy, the FCPA data serves as a helpful model for how the Bribery Act might work.

‘The SFO’s future is settled for the foreseeable future, as has been explained on numerous occasions in and out of parliament by the home secretary, the attorney-general and me. It remains an independent investigator/prosecutor with its own director accountable to parliament through the law officers. It will concentrate on investigating and prosecuting domestic and international complex economic crime.

The SFO will work closely with the economic crime command within the National Crime Agency – as it will with the City of London Police and other relevant criminal justice agencies at home and abroad. There is no mystery, no confusion and no need for suggestions to the contrary.”

At a Munich court, prosecutors on Tuesday accused Thomas Ganswindt  of tax evasion and neglecting his supervisory duty by failing to halt a corruption scheme at Europe’s largest engineering group by sales.

At the first regular day of the trial  Mr Ganswindt and his lawyers denied that the 50-year-old former manager had committed any crime.

Mr Ganswindt said he had trusted in the financial team at the telecommunication unit that he was heading at the time. “There have always been suspicions, but during my time at Siemens, I didn’t learn about one real and concrete case of bribery,” Mr Ganswindt said. “My motto was always to trust my staff unless there was clear evidence of wrongdoing.”

The conglomerate’s former “Com” unit was at the centre of the scandal that involved widespread payments to officials around the world in order to win contracts.

Prosecutors argued that Mr Ganswindt  should have spotted signs of corruption such as Siemens’ move to bestow personal computers on a museum at the behest of a Russian client.

They are also accusing him of tax evasion, because the bribes had been officially labelled as consultancy costs and were subsequently tax-deducted. The maximum possible sentence is five years imprisonment.

Prosecutors’ and Siemens internal investigations have in the past few years uncovered a system of slush funds used to pay up to €1.3bn in bribes.

Mr Ganswindt is not the first manager to face criminal charges in connection with the scandal, but he is the most senior one. The Munich court has sentenced several middle-ranging managers with fines and suspended sentences, and prosecutors are continuing to investigate two dozen more, including two executive board members.

In a collateral civil suit Siemens has also sued Mr Ganswindt for €5m in damages for failing to stop the corruption, which he is contesting, and it is claiming another €15m in damages from Heinz-Joachim Neubürger, the group’s former chief financial officer. Mr Neubürger has denied any wrongdoing.

Please click for a link to the Guidance and the Act.

The Justice Secretary’s foreword to the Guidance states that the core principle is “proportionality”. “Rest assured – no one wants to stop firms getting to know their clients by taking them to Wimbledon or the Grand Prix”. Issuing the Guidance, Ken Clarke said: “I have listened carefully to business representatives to ensure the Bribery Act is implemented fully and in a workable, common sense way” seeking to reassure business further he added: “We don’t have to decide between tackling corruption and supporting growth. Addressing bribery is good for business because it creates the conditions for free markets to flourish.”

Richard Alderman, Director of the Serious Fraud Office, signaled his organisation’s intention to deploy the act speaking of its “wide” scope. He added, “I want to see companies police themselves and develop an anti-corruption culture. I want to get on and investigate those companies that are putting our ethical UK businesses at disadvantage by offering bribes”.

Questions have been raised as to whether the SFO will have sufficient resource to take forward multiple large-scale international bribery investigations. Importantly, the Guidance does not put a financial figure on when a gift becomes a bribe and also stresses that the Act does not provide an exemption for any form of facilitation payment.

The Joint Prosecution Guidance issued by the DPP and the Director of the Serious Fraud Office reminds the business community that: ”Bribery is a serious offence. There is an inherent public interest in bribery being prosecuted in order to give practical effect to Parliament’s criminalisation of such behaviour.”

The joint guidance lists factors tending against prosecution including situations where:
• The court is likely to impose only a nominal penalty ;

• The harm can be described as minor and was the result of a single incident;

• There has been a genuinely proactive approach involving self-reporting and remedial action.

The Joint Guidance highlights one policy objective behind the legislation.
“Prevention of bribery of foreign public officials is a significant policy aspect of the Act”

The Government’s Guidance confirms that companies and organisations are being encouraged to self report and take robust, positive action from the top down, to prevent bribery and corruption by communicating a commitment to zero tolerance to bribery throughout its organisation.

Adequate bribery prevention procedures require an initial risk assessment as a necessary first step. The level of the risk will vary with the type and nature of the persons associated with it and but, externally, it is likely to fall into five broad risk groups: country, sectoral, transaction, business opportunity and business partnership.

The internal and external bribery prevention procedures should seek to ensure there is a practical and realistic means of achieving the organisation’s stated policy objectives across the company. The Government realises that changes in dealings with existing associated persons may take time and may depend on the level of control and practicability of achieving change but it is clear that steps to influence change are to be encouraged.

The Government expects training, which is proportionate to the risk the company faces, should form part of this commitment to establish an anti bribery culture and could be mandatory for new employees or for agents on a weighted risk basis. Once the culture is established, it should be demonstrated that its procedures are monitored, reviewed and where necessary improved.

The Guidance encourages organisations to consider seeking some form of external verification or assurance of the effectiveness of its anti -bribery procedures, but such certification may not necessarily mean that the company has established its adequate procedures defence to a charge under section 7 of the Bribery Act.

This area of new law is likely to be extremely fact sensitive and only when cases are dealt with by the courts, following decisions taken to prosecute, will there be a clearer picture of its application.

Meanwhile, organisations need to familiarise themselves with the checklist below of principles underpinning the legislation and begin to plan accordingly.

1) Proportionate procedures: a commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces.
2) Top level commitment: Top level management must foster a culture within the organisation in which bribery is never acceptable.
3) Risk assessment: The commercial organisation must assess the nature and extent of its exposure to potential risks of bribery on its behalf by persons associated with it.
4) Due Diligence: The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation.
5) Communication (including training): bribery prevention policies and procedures must be embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks it faces.
6) Monitoring and review: The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.

For advice with regard to the impact of the Act and the Guidance, please contact us at enquiries@fulcrumchambers.com or by telephone on 020 7186 0420.

The individuals sentenced were Richard Gledhill, the Sales Export Manager, who plead guilty to an offence of unlawfully making funds available to Iraq and Charles Forsyth, the Managing Director, and David Mabey, the Sales Director, were found guilty by a jury of knowingly agreeing to provide funds. A kickback of €422,000 was made available to pay Iraqi government officials and routed through offshore accounts, the payment had been approved by both Mr Forsyth and Mr Mabey.

HHJ Rivlin QC found the fact that the full cost of the kickback had effectively been borne by the United Nations was an aggravating factor. The judge found that Mr Forsyth was the most culpable of the defendants as he authorised the payments and knew exactly what they were for. In addition Mr Forsyth attempted to implicate Mr Mabey and falsely accused Mr Gledhill of being the sole perpetrator in an attempt to shift the blame from himself. Mr Forsyth misled an independent investigation and hid the ‘key document’ from solicitors. The judge sentenced Mr Forsyth to 21 months imprisonment, disqualified him from holding a directorship for 5 years and order him to pay £75,000 in legal costs.

The judge found that Mr Mabey was a bit part player in the transaction but that he did authorise the payment and knew what it was for. The judge stated that when the Director of a major company plays even a small part in an offence as serious as this he must serve a custodial sentence. Mr Mabey was sentenced to 8 months imprisonment, disqualified from holding a directorship for 2 years and ordered to pay £125,000 in legal costs.

The judge found that Mr Gledhill’s offence did pass the threshold of a custodial sentence. However in circumstances where Mr Gledhill had provided a full and frank admission to the SFO and given evidence against Mr Forsyth and Mr Mabey the sentence of 8 months imprisonment could be suspended for 2 years.

This case demonstrates the potential benefits available to organisation and individuals who self-report and co-operate fully with prosecuting authorities. Early reporting of suspected improper dealings combined with a full independent review of the situation can result in a significantly reduced penalty for both the company and any involved individuals.

The website contains profiles on all members of Chambers as well as news updates and an explanation of the full range services and skills Fulcrum Chambers can provide to assist any organisation dealing with corruption related issues.